Digital Wine Ventures to launch same day delivery service through Australia Post

Customers will soon be able to receive bottles of wine delivered through the post within the same day of placing an order, thanks to a new partnership between Digital Wine Ventures (ASX: DW8) and Australia Post.

The online beverage supplier said the newly inked deal will enable the launch and immediate rollout of its specialised wine distribution service, WineDepot, within four existing Australia Post distribution centres in Sydney, Melbourne, Brisbane and Perth.

The service is intended to streamline warehousing, ordering, processing and delivery by keeping inventory reserves in these depots, cutting down on delivery times, freight costs and the risk of breakages.

“Each depot will hold a very broad range of suppliers’ inventory on consignment, which can be accessed by a range of sales channels,” Digital Wines chief executive officer Dean Taylor said.

“As orders are processed through our platform, they are routed to the depot closest to the delivery address where they are picked, packed by bottle or case, and drop-shipped to the end customer.”

“Depots are then automatically replenished on a bi-weekly basis from WineDepot’s regional bulk storage facilities on behalf of suppliers,” Mr Taylor said.

Under the partnership, Australia Post will provide the warehouses, staffing, back-end IT systems and infrastructure, reducing Digital Wine’s capital outlay for WineDepot.

In addition, the orders will flow directly into Australia Post’s fulfilment system Fulfilio, avoiding the need for collection, transfer and sortation.

Mr Taylor said WineDepot’s same-day turnaround would enable the wine industry to provide the same calibre of service as online retail giant Amazon.

“With the arrival of Amazon, every Australian consumer will soon expect fast and free delivery. Any business not offering the same will simply lose market share,” he said.

The agreement is for an initial five years, including a 12-month term in which the partners have agreed to exclusively work together on the wine storage, picking, packing and delivery service for agreed wine merchants.

Addressing regional limitations

Australia Post head of growth products Paul Hersbach said its new alliance with Digital Wines would help support Australian wine businesses which are often limited by their regional locations.

“As wine is heavy, bulky and fragile, shipping one case at a time from regional areas to consumers in major cities drives higher costs and increases risk of damage to consumer product,” he said.

“Our partnership with WineDepot provides the wine industry with a specialised distribution service that will not only save money but also improve the consumer delivery experience.”

“We believe that it will help many wine businesses increase their online sales as they place their inventory closer to end consumers and offer same day evening delivery as a standard service,” Mr Hersbach added.

Global expansion plans

The first four Australian depots are expected to be established by the end of this year, which Mr Taylor said was “well ahead” of the company’s original schedule.

“That’s a massive saving in both time and capital expenditure that will allow us to start looking at ways to expand the platform into other markets such as China, UK, Singapore, New Zealand and USA as early as next year,” he said.

While Australia produces about $6 billion of wine each year, Mr Taylor said this was just a small part of the global wine market, valued in excess of $300 billion.

“Partnering with existing carriers and or 3PL [third party logistics] companies like we have with Australia Post in other key wine markets makes a lot of sense,” he added.

By early afternoon trade, Digital Wines shares were up 12.5% at $0.009.